RESEARCH ON THE CONDUCT OF A BASELINE STUDY ON TAX IN NIGERIA, INCLUDING CITIZENS’ TAX PERCEPTION AND TAX GAPS ANALYSIS
REQUEST FOR PROPOSAL
The Civil Society Legislative Advocacy Centre (CISLAC), requests for proposals from a competent consultant to undertake a research on the status of taxation in the informal sector in Nigeria. This is in furtherance of her Financing for Development (FFD) project.
Background to the project
In the year 2012, under the Capacity for Research and Fair Taxation (CRAFT) project, CISLAC, with support from Oxfam, conducted a baseline study of Taxation in Nigeria, including Citizens’ Perception and Tax Gap Analysis. The research revealed the existence of a tax gap, low Tax to GDP ratio and low citizens’ perception of the efficiency of the tax system in Nigeria.
Specifically, the research findings show high levels of leakages in tax administration with under-filing, under-reporting and under-remittance contributing to the tax gap. Corruption, poverty and absence of service delivery were also contributors to poor tax compliance. There were also indications of a narrow tax base related to the widespread exclusion of a large part of the informal economy from the tax net. The research showed that poverty, unemployment and absence of social services and infrastructure contributed to why citizens’ low tax compliance. It also revealed that most of the respondents perceived that the tax policies and laws are adequate but enforcement insufficient.
The research made some recommendations including the expansion of the tax base by capturing more of the informal economy and stimulation of the economy to create more employment, reduction of corruption and leakages in tax administration, provision of social services to promoter voluntary tax compliance and general improvement in the tax system to make it more effective and efficient to curb evasion.
These findings informed several of the interventions by CISLAC, with support from Oxfam, under the CRAFT project from 2013-2015. This comprised largely of capacity building for citizen groups, awareness creation, alliance building and advocacy to relevant government agencies at various levels.
These have resulted in the introduction and intensification of fresh initiatives to block leakages through the introduction of information and communication tools in tax administration. These include the Integrated Tax Administration System (ITAS), piloted in 2013 and aimed at reducing human involvement in the tax administration system aimed to reduce corruption and leakages; the intensification of the use of the Tax Identification Numbers (TIN) to capture tax payers data and deter evasion by making this a condition for business transactions with government; more aggressive enforcement of the tax laws to promote compliance; the introduction of the Presumptive Tax Regime (PTR) which commenced in 2013, to increase tax revenues from the informal economy and the move by the Joint Tax Board to address the instances of multiple taxation to encourage voluntary compliance and the enactment of the Transfer Pricing Regulation which came into effect in 2014. There was also sustained public enlightenment to promote tax payment as linked to service delivery has also be embarked upon.
This has resulted in sustained improvement of tax revenues and the tax to GDP ratio from about 6.1% in 2012 to 14% in 2013. With the rebasing of the economy in 2014, it came to about 7.8%. If the tax revenue from oil is isolated, then the for the non-oil sectors comes to about 4.6%, still among the lowest in the world and far short of the 20% projected for countries at her level of development. Previous administrations has worked towards the enactment of new tax laws such as the property tax in the Federal Capital Territory in 2015, proposed Luxury taxes in the 2014 Appropriation Act and presently, there is a proposed Communication Tax Bill undergoing the legislative process.
To further enhance revenues, the new leadership of the Federal Inland Revenue Service (FIRS )stated that it has successfully registered 362,000 new taxpayers across the country within the last few months and aims at ensuring up to 90% compliance in tax payments and remittances.
With the dwindling revenues from the extractive sector and continued resort taxation as the means of funding development and with admitted low tax to GDP ratio, increasing poverty and inequality and fight against corruption and the with the persistent dominance of the informal economy in the face of efforts to diversify the sources of revenue, further emphasizing the place of taxation and in the light of the MDGs giving way for the SDGs with renewed emphasis on financing for development in countries like Nigeria, it has become timely to conduct a follow-up research to the baseline of 2012.
This to identify trends and socio-economic policy interface and establish what changes have occurred and why, if any, to provide data and information with which civil society can engage to promote the design, implementation and monitoring and evaluation of tax policies and the tax system to ensure that it mobilizes funds for development and effectively plays the roles of re-distribution, representation and re-pricing while addressing the prevalent problems of poverty and inequality, which underlie to tax justice campaign.
Taxes remain the most reliable source of financing development. In Nigeria, with the fate of revenues from the extractive sector, the emphasis of maximizing tax revenues and internally generated revenues. The dwindling oil revenues and consequently, resources available to fund the budget and the demands of the sustainable development goals has seen the government making frantic efforts to generate more tax by increasing the tax base, enlarging the tax nets and considering the raising of the tax rate for indirect taxes such as VAT. In spite of several efforts and initiatives resulting in increased tax revenues, the tax to GDP ratio in Nigeria remains among the lowest in the world, taxation from the informal economy remain distorted with high incidences of evasion and underpayments on the one hand, coinciding with rampant cases of heavy burdens arising from multiple taxes, levies and rates, on the other. Meanwhile, social services, poor infrastructure, poverty, inequality and failure of small enterprises remain pervasive. Having undertaken advocacy after the initial baseline in 2012 under the CRAFT project and recorded some change in tax policies and practices and at the juncture of a renewed government efforts to raise additional revenue through the tax system, another research on the status of the tax system and its ability to increase tax yield without exacerbating poverty and inequality, is necessary and timely.
The goal of the study is to have another well-researched study on the status of the Tax System of Nigeria that assesses the changes that has occurred since 2012 and its impact on revenues, citizens’ welfare, poverty, inequality, women and overall development.
- Appraise the developments in tax policies and practices in Nigeria between 2012 and the present
- Understand the current taxation landscape in Nigeria, including factors and conditions driving low tax to GDP ratio in the Nigeria
- Identify key strategic actions and actors needed to galvanize citizens and policy makers against undesired tax practices
- Generate evidence base which can support CSOs advocacy and useful in developing alternative policy instruments to be utilized for campaigning by Oxfam in Nigeria, partners and allies linking local issues to the global agenda
- Recommend possible strategies of achieving voluntary tax compliance by striking a balance between maximum revenues, equity and fairness.
A research report that includes an analysis of how our tax systems functions, the systems and procedures instituted by tax administration bodies, the general impact on of tax reforms on poor citizens, tax gap, citizens’ tax perception the effectiveness of tax policies and practices at federal, states and local levels in realizing the tax purposes of taxation for Revenue, Re-distribution, Representation and Re-pricing and link these with development, poverty, inequality and economic and gender justice. It will also reflect the status of legal and policy frameworks of taxation in the in Nigeria, their impacts on citizens and a recommendation on approaches toward effective tax policies and practices that will provide a win-win situation for governments’ drive for revenue, sustainable livelihoods for the tax payers and facilitate overall development.
Conduct of a research on the current status the tax system in Nigeria with citizens’ perception, tax gaps analysis, with emphasis on ongoing reforms and its impacts on citizens’ welfare, poverty and inequality.
Scope of work
- An Overview of Taxation in Nigeria including changes brought about policy reforms since 2012
- Multiple spectrum of tax issues in terms of the policy legal frameworks, administration, payers’ (individual and corporate responses and attitude).
- Accountability and reporting of tax revenue and tax management to include VAT and other types of tax
- Government receipts and revenue accruing from tax
- Leakages and revenue loss arising from either tax laws or policy implementation
- Causes of varying attitude to paying tax amongst groups/classes/gender in society
- Relationship between tax, poverty levels, attitude to tax and Development
- Relationship between perceived inequalities in tax burden and response to tax payment
- Relationship between service delivery and tax payment
- Perception of corruption in tax agencies and payment of tax and its effects on citizens’ attitude to tax
- Possible disaggregation in sectoral contribution to tax revenues to total national revenue
- Impacts of multiple layers of taxation on payers’ attitude across the federation
- Tax potentials, tax administration and actual tax receipts from the informal sectors
- Citizens’ perception of the tax system (laws, policies, administration, efficiency, etc.
- Tax Gaps analysis, trends in tax policies (regressive or progressive)
- Gender Implications of existing legal, policy and administration of tax frameworks in Nigeria
The consultant to be engaged for the study, will be expected to develop and submit a concept note which details the methodology and timetable proposed for the study. This will be reviewed and approved by CISLAC and Oxfam in Nigeria prior to the commencement of the study.
A Country Study Report of Taxation of the informal sector in Nigeria and its impacts on small and subsistence businesses as it relates to poverty, inequality and sustainable livelihoods vis a vis the tax yield.
Project Implementation Schedule (PIS)
- Based on an initial evaluation of the current situation, the consultant shall prepare and submit a Project Implementation Schedule covering the required period of the assignment to the CISLAC
- The schedule will include both an outline of the project over the full period and a detailed work plan for each component of the project.
- A draft PIS should accompany the Consultant’s technical proposal. The specific modalities and timetable of the consultations with stakeholders will also be defined and outlined at this stage.
Project Duration and Workplan
This assignment is expected to be completed within six (6) weeks effect from the date that contract is signed. A draft timetable will be proposed by the Consultant as part of its Project Implementation Schedule, to include a schedule of key milestones, within the expected time frame. After discussion and approval of the timetable by CISLAC, the timetable will become part of the Project Implementation Schedule in the Terms of Reference of the contract.
The Consultant will report directly to the Executive Director, CISLAC. The summary of the indicative reporting schedule for submission of deliverables shall be as follows:
|Effective date of contract/Commencement of services|
|Project Implementation Schedule|
|Draft Final Report|
Competence and Expertise Required
CISLAC expects that the Consultant must have the following experience and competencies:
- A minimum of 10years professional working experience in Research and Conduct of Surveys and related fields.
- Knowledge and experience on development issues, public policy analysis, implementation, and policy implementation and evaluation.
- Exposure to implementation of tax policies and its impacts on citizens welfare, development, inequality and poverty
- Understanding of Taxation in Nigeria, the evolution of tax laws, policies and practices at federal, state and local government levels.
- Experience in stakeholders relations and engagement, public relations and outreach programs.
- Fluency of English language skills, and competency in research, survey and report writing
- Versatility in the conduct of independent research, impact assessment, surveys, data collection, analysis and interpretation.
- Evidence of conduct and completion of similar studies (references would be valuable)
The prospective Consultant would be expected to collaborate closely with relevant officials in the FIRS and should clearly demonstrate how this will be achieved in the proposal.
The proposal should contained a detailed work-plan which should not exceed six (6) weeks from the date of signing a formal contract upon a successful bid.
A Financial bid should also be included in the proposal.
All proposals should be sent to firstname.lastname@example.org on or before midnight of Friday, October 21, 2016 with the subject line: “RESEARCH ON THE CONDUCT OF A BASELINE STUDY ON TAX IN NIGERIA.”